By Dan Bolton
Sarah Segal began the new year as c.e.o. of Montreal-based DavidsTea. Segal, a board member from 2012-2017, was also the company’s chief brand officer, a title she retains. Since 2013 Segal worked as c.e.o. of artisanal candy retailer Squish, which she founded. DavidsTea co-founder Hershel Segal announced that he has stepped down as interim c.e.o. He remains chairman of the board of directors. Frank Zitella was named president, adding to his current responsibilities as chief operating officer and chief financial officer.
The company’s transformation from a brick-and-mortar retailer to a packaged tea and online sales leader bears watching. Following a dismal spring when the company was forced to close all but 18 stores, sales declined 87% to $4.1 million. However, online sales surged, and sales in grocery soared as pandemic-anxious consumers stocked up.
“Sales traction for both channels during the quarter remained strong, translating to more than 145% growth over the prior year,” said Zitella. Analysts praise DavidsTea’s new “asset-light business model,” estimating that the labor savings, minimal rent, and overhead multiplied cash flow by 15 times.
“Sarah and Frank have demonstrated strong leadership and know-how in the face of the ongoing challenges DavidsTea has faced and have both been instrumental in setting the strategic vision and executing our ongoing transformation into a digital-first organization,” said Herschel Segal.
After declaring bankruptcy following the closure in March of 166 locations in the US and Canada, the company remains under court protection. The collapse of store sales caused gross margins to fall, but operational savings proved substantial. That is why the company reported $2.6 million in profits in the quarter ending September. Restructuring continues through March 19.
“As one of the leading tea merchants in North America, DavidsTea is on a new path, squarely focused on becoming a more agile organization,” said Sarah Segal, promising “a stronger and more focused DavidsTea.” She said it is her goal to “solidify our position as a digital-first, industry-leading provider of on-trend, high-quality loose-leaf tea, tea accessories, and gifts.”
In November 2019, DavidsTea was named one of the Best Online Shops in Newsweek's food category. According to Leger Marketing, the company is popular with both Millennials and Gen Z consumers, which presented DavidsTea with its WOW Award, ranking No. 2 in Overall Customer Experience for Ontario, Canada.
Segal has a BA in environmental health from McGill University, and a master’s in water science from Oxford University. Many women operate tea shops and brands, but few are responsible for operating large-scale chains.
Segal, along with Spice & Tea Exchange c.e.o. Amy Freeman, are exceptions. Freeman now manages the largest tea-related retail chain by store count. The US-company, headquartered in St. Augustine, Fla., offers 40 teas and 140 spices. Founded in 2008, the Tea & Spice Exchange continues to expand franchise locations, which number 70, including the newest shop in Port Jefferson, NY.